The new breed of tech billionaires

The crown jewel in this year’s edition of the Forbes 400 list of America’s richest people is a charming interview with Warren Buffett and hip hop start Jay Z.

As well as some great pictures (you can see the piece here) there are number of highlights.

First there are a few pieces of traditional Buffett wisdom, including this nugget about the importance of self belief: “It never bothered me if people disagreed with what I thought, as long as I felt I knew the facts. There’s a whole bunch of things I don’t know a thing about. I just stay away from those. I stay within what I call my circle of competence.”

And there is also a classic response from Jay Z when asked whether he has any advice for Buffet. “He’s super-duper joking,” Jay Z says, in a very un-rock star moment.

But the interview is as symbolic as it is interesting. What Forbes has tried to highlight in a slightly folksy way is the changing nature of wealth in America, where an older generation of old-economy entrepreneurs (represented by Buffett, who references Ben Graham a number of times in the interview) is gradually making way for a new generation of business people riding the wave of technology.

But America’s new wealth order is in sharp contrast to that of Australia, where our upper echelons of wealth remained dominated by resources, retail and property.

The top 20 of the Forbes 400 underlines this point. While the names in the top 20 have changed little this year, a quick scan of this group shows how important technology has become.

There are three Microsoft shareholders, led by founder Bill Gates, and the founders of Oracle, Amazon, Dell and Google. Nine members of the top 20 are from the tech sector.

Compare this to the top 20 of the BRW Rich 200, where there are no technology entrepreneurs. The closest we get is Computershare founder Chris Morris, who is worth $750 million and is the 49th richest person in Australia.

It is also worth noting that the average age of the top 20 of the Forbes 200 is 61.65 years, compared to 66.7 years in Australia.

On the Forbes 400, there are three people in the top 100 under the age of 40, led by 26-year-old Facebook chief Mark Zuckerberg ($US6.9 billion, up an impressive $US4.9 billion in the last 12 months) and hedge fund investors Daniel Ziff ($US4 billion) and John Arnold ($US3.3 billion).

The youngest person in the top 100 of the BRW Rich List is 43-year-old James Packer, who inherited his fortune of $4.1 billion.

What do these trends say about the differences between Australia and the US?

It could be argued that these trends just underline how hard it is to break into the small club of ultra-wealthy individuals with over $1 billion. Wealth in Australia is built around very capital intensive, competitive industries, where the scale of big players make it difficult for younger entrepreneurs to build giant fortunes.

But perhaps the differences between the US and American super wealthy clubs hint at a wider problem – our struggle to develop, support and nurture entrepreneurs, particularly in technology-related industries.

While the upper echelons of the Forbes 400 have been revitalised by a group of globally-focused tech stars such as Jeff Bezos, Larry Page and Sergey Brin, the top ranks of Australia’s list have changed little in the last decade, perhaps with the exception of Andrew Forrest’s emergence and the inclusion of the heirs of Lang Hancock and Peter Wright, Gina Rinehart and Angela Bennett and Michael Wright.

Where are our next billionaires coming from? Will the next lot of names we see at the top of the Rich 200 simply be the children of the current members? And will the next generation create new businesses, new jobs and new opportunities, or simply manage our existing market leaders?

Right now, it’s hard to see where the new crop will come from.

Finally, one of most important things to study in any rich list is the list of newcomers. While the most spectacular debut on the list comes from Facebook co-founder Dustin Moskovitz, who at the tender age of 26 becomes America’s younger billionaire with a fortune of $US1.4 billion (he is eight days younger than Mark Zuckerberg) the clear trend is the rise of the energy sector.

There are six newcomers from oil and gas, led by Terrence Pegula (who made about $US3 billion when Shell bought his gas business East Resources) and Rodney Lewis (who owns a natural gas empire worth $US2.25 billion).

Last week we looked at Australian hedge fund maestro Phil Mathews, who said energy would be the theme of our lifetimes. The newcomers on the Forbes 400 suggest he is right.